Presently, the new tax regime under section 115BAC is the default tax regime, and the taxpayers have the option to choose old tax regime by filing intimation to the department in the prescribed form.
The new tax regime has been growing significantly beneficial for middle income tax payers for the past couple of years. Whereas, the old tax regime remains almost unchanged. This has lead to the question of whether the old tax regime could be discontinued, and if it is still applicable.
Old tax regime is still applicable for FY 2024-25 and FY 2025-26. And it is expected to continue in the near future.
There were no changes made to the tax slabs under the old regime. The tax slabs under the old regime are as follows:
Income Slabs | Income Tax Rates |
Up to Rs. 2.5 lakh | NIL |
Rs. 2.5 lakh - Rs. 5 lakh | 5% |
Rs. 5 lakh - Rs. 10 lakh | 20% |
Above Rs. 10 lakh | 30% |
Income Slabs | Income Tax Rates |
Up to Rs. 3 lakh | NIL |
Rs. 3 lakh - Rs. 5 lakh | 5% |
Rs. 5 lakh - Rs. 10 lakh | 20% |
Above Rs. 10 lakh | 30% |
Income Slabs | Income Tax Rates |
Up to Rs. 5 lakh | NIL |
Rs. 5 lakh - Rs. 10 lakh | 20% |
Above Rs. 10 lakh | 30% |
Note:
Particulars | Old Tax Regime | New Tax regime |
HRA Exemption | ✓ | X |
Leave Travel Allowance (LTA) | ✓ | X |
Other allowances including food allowance of Rs 50/meal subject to 2 meals a day | ✓ | X |
Standard Deduction (Rs 50,000 under old regime and Rs. 75,000 under new regime) | ✓ | ✓ |
Entertainment Allowance Deduction and Professional Tax | ✓ | X |
Perquisites for official purposes | ✓ | ✓ |
Interest on Home Loan u/s 24b on self-occupied or vacant property | ✓ | X |
Interest on Home Loan u/s 24b on let-out property | ✓ | ✓ |
Deduction u/s 80C | ✓ | X |
Employee's (own) contribution to NPS | ✓ | X |
Employer's (own) contribution to NPS | ✓ | ✓ |
80D- medical insurance premium | ✓ | X |
Disabled Individual - 80U | ✓ | X |
Interest on education loan | ✓ | X |
Interest on Electric vehicle loan | ✓ | X |
Donation to Political party/trust etc | ✓ | X |
Savings Bank Interest u/s 80TTA and 80TTB | ✓ | X |
Gifts up to Rs 50,000 | ✓ | ✓ |
Deduction for family pension (Up to Rs. 15,000 in old regime and Rs. 25,000 in new regime) | ✓ | ✓ |
Exemption on voluntary retirement 10(10C) | ✓ | ✓ |
Exemption on gratuity u/s 10(10) | ✓ | ✓ |
Exemption on Leave encashment u/s 10(10AA) | ✓ | ✓ |
Daily Allowance | ✓ | ✓ |
Transport Allowance for a specially-abled person | ✓ | ✓ |
Conveyance Allowance | ✓ | ✓ |
The old tax regime is still applicable for the current financial year and assessment year, and is not anticipated to be revoked in the near future. Taxpayers who have a lot of tax saving deductions can still opt old regime to minimize their taxes.